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Forget the State Pension, these FTSE 100 dividend growth stocks could help you to retire wealthy

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If you’re concerned about whether or not you’ll be able to live the retirement you’ve always dreamt of when you finally come to hang up your work boots, well, you probably should be.

You’d be foolish to rely on the State Pension to pay you an adequate income to live off of in your autumn years. The latest article by my foolish colleague Rupert Hargreaves quoted numbers from Which? that showed the average retired household spends around £26,000 per annum, three times what the State Pension for one person stands at.

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It’s clear that savers need to put their money to work in intelligent places in order to avoid surviving on the breadline come retirement. And I’m backing the following  FTSE 100 dividend stocks to make many investors a fortune come retirement.

Sleep easy

Take InterContinental Hotels Group (LSE: IHG), for example. A solid record of double-digit-percentage earnings growth over the past half a decade has lit a fire under dividends, and City analysts are expecting further progress on both fronts.

In 2018, a 21% profits improvement is being estimated, leading to predictions that the total dividend will rise to 120 US cents per share from 104 cents last time out. Although bottom-line growth is expected to cool to 7% next year, the full-year payout is still predicted to stomp to 133 cents.

Now yields of 1.9% and 2.1% may not get the pulse racing, but investors need to look past this fact and instead focus on the probability of blowout dividend expansion continuing long into the future. I’m confident in this outlook as momentum picks up in all of InterContinental’s main territories, and the company rapidly expands its global footprint (it added 22,000 rooms between January and June, alone).

A forward P/E ratio of 21 times may not look like great value, although a corresponding PEG reading of 1 suggests that the hotelier is in fact a bona-fide bargain right now.

Take a sip of something sweet

Another firm which has brilliant exposure to emerging markets is Diageo (LSE: DGE). North America may be the Footsie firm’s largest single market, and I’m expecting profits from this region to continue streaming higher. But the combination of rising population levels and leaping disposable income levels in developing nations makes me very excited about demand for Diageo’s highly-desirable drinks in the years ahead.

It’s true that these regions have proved a little problematic for Diageo of late, thanks to weak emerging market currencies. Indeed, it was announced this week that this issue would put a £175m dent in net sales for the year to June 2019.

Still, the Guinness manufacturer’s dedication to spreading its global wingspan and investing in its key labels means that “organic net sales growth in fiscal 2019 [should] be broadly in line with last fiscal year” and consistent with its medium-term target of “mid-single digit growth.”

City forecasters are expecting earnings to keep chugging higher, a 7% rise is predicted for this year.  And this is expected to support a 68.9p per share dividend, up from 65.3p next year, and yielding 2.6%.

Diageo doesn’t come cheap. But given its brilliant earnings, and thus dividend outlook, I reckon it’s worth a premium prospective earnings multiple of 21.3 times.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo and InterContinental Hotels Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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